The twin volatilities of cross-currency market and global energy prices took their toll on Wipro, with its IT services revenue remaining flattish in rupee terms while the net profit grew just 3.6%, missing analyst expectations. At the end of the fourth quarter last fiscal, Wipro reported IT services revenue of Rs 11,240 crore, below expectations. Even for the first quarter of FY16, the IT major has guided to a dollar revenue growth in the range of -0.5% to 1%. In dollar terms, IT services revenue for the quarter declined sequentially by 1.2%.
The net profit in the fourth quarter stood at Rs 2,270 crore as against Rs 2,190 crore in the preceding third quarter. On y-o-y basis, net profit grew by just 2%. Wipro CEO TK Kurien said: “On an overall basis, the demand environment remains stable. However, we see uncertainty in two industry sectors. From a portfolio mix, we have been relatively overweight in energy and the sharp cutbacks in capex have impacted us close to $100 million in revenues in FY15 compared to FY14.” He added that it has also seen certain slowness from its largest business vertical —BFSI.
For the full year of 2014-15, Wipro reported a consolidated revenue of Rs 46,950 crore, recording growth of 8%, while the net profit touched Rs 8,650 crore, showing a rise of 11%. The company’s IT services revenue for FY15 was Rs 44,020 crore, recording a rise of 10%.
In US dollar terms, IT services revenue for FY15 stood at $7.1 billion, showing a rise of 7%. According to Wipro CFO Jatin Dalal, the company lost 1.7% of revenue growth due to currency volatility and in constant currency terms it stands at 8.7% for FY15.
Dalal said if the current exchange rates continue during the course of the year, it would be impacted by 3-4% during FY16.
Wipro, however, saw marginal improvement in the operating profit margin to 22% at the end of the fourth quarter of FY15 as against 21.8% in the preceding three-month period. The company expects to operate in this narrow range during the course of FY16.
On the human resources front, Wipro’s headcount touched 158,217 at the end of the fourth quarter and the attrition rate came down by 80 basis points on a sequential basis.
However, Wipro’s performance in all verticals was subdued during the fourth quarter, with the energy segment taking the biggest hit of 6.6% decline, followed by global media and telecom with a 3.7% fall.
Wipro recorded flattish growth from its largest market Americas, while Europe declined by 5.7%. The only bright spot was India and Middle East business was 10.1%.
Kurien remained confident of the company’s prospects for FY16 and said, “We are well positioned to take advantage of the opportunities in the market, while tackling headwinds in certain areas. We see digital, open source and artificial intelligence as key levers for driving business change and reshaping delivery model for the future.”